Performance Rating – Ditching The 5-Point System

by: Dean Fulford

A high-performance workplace culture is rooted in organizational values, and reinforced through a compelling vision. Unfortunately, some traditional human resource processes like performance rating systems can work against both productivity and culture. This is why many world-class organizations are moving to systems that encourage real-time feedback and focus on applying learning toward future success. In fact, I coach managers and employees to approach feedback sessions that way: one-third reviewing recent accomplishments, and two-thirds talking about how that learning can be applied.

While pretty much everyone dislikes the ‘old’ system of performance rating, there seems to be an odd attachment to it. Traditional performance reviews cause so much angst!  Managers debate the relative worth of employees.  HR nags for the completion of forms.  Yet employees don’t always receive the developmental feedback they deserve. Deloitte estimates that their process consumed 2 million hours per year, most of it behind closed doors talking about the outcome of the process!

So, how do you break away from the old 5-point rating system?  Simply embrace frequent, candid feedback that supports individuals in reaching their goals. This starts with having managers trained in the art of delivering constructive feedback with an eye to the future. Over time all employees should be encouraged to provide (and receive) candid feedback to their colleagues.

Replacing Performance Rating with Real-Time Feedback

For real-time feedback to become the norm, leaders should be coached to follow these 3 steps:

  1. Acknowledge an outcome that advances the organization’s mission or vision, or helps the team accomplish its goals.
  2. Explain the reason for recognizing that particular outcome.
  3. Give the feedback immediately in order to give focus to what they do well.

Companies with open cultures deliver performance feedback generously, in real-time through on-the-job coaching and peer-to-peer feedback. By embracing this continuous learning mindset they enjoy a marked improvement in employee engagement and develop a culture that inspires trust and productivity. And, best of all, they stop wasting effort arguing about giving someone a ‘3’ rating and, instead, have timely quality conversations with employees!

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